The Emotional Investor Part 1

Many serious investors out there must have heard of or read the investment classic “The Intelligent Investor” by Benjamin Graham, the father of value investing.

I have my own version – The Emotional Investor.

The emotions associated with investing (or trading/speculation for that matter) are very real! And may I add very counterproductive, even harmful as well!

When one is emotional, sense and level-headedness are thrown out of the window. It blinds the most intelligent of people. It clouds the judgement of even the wisest of them all.

What deadly emotions are we talking about here?

1. Greed

So what’s new? Greed has been present in men since the very beginning of time. The insatiable urge to squeeze out more money, every little ounce of them. I for one has experienced this before, many times in fact!

Greed is one of the worst destructive emotional behavior.

Have you ever found yourself in a situation where you are supposed to take profit, quit the trade, but decide to stay on longer just to earn a few more percentage points, and in the process going against your own rules?

I have.

Is stock investing really gambling in disguise?

I do remember vividly of one instance when I was discussing investment with a dear friend of mine.

When I mentioned the word ’stock’, he straight away got a bit wary and defensive and commented, “Isn’t playing with stock no different from gambling? And not to mention it is a high risk game as well? If I make just one wrong move, I’ll be in deep shit right?”

Reflecting back then, I think there is still a perceived notion that dabbling in stock is equivalent to gambling. I don’t really blame my friend for that statement. He had a bad experience where his dad lost a pile in the stock market. Must be traumatizing for him.

Yes while I do admit, getting involved in stocks can be like gambling in certain cases, to equate both of them together will be to do injustice to all the careful and rational investors  who do their due diligence out there.

All too often, we hear of people losing a fortune in the stock market. When you really examine why is this so, the familiar old reasons come out. There are many, but I will just pick 1, which is

Listening to the hot tips.